Accounting / July 9, 2018 / Justice Buckley
Cash flow from investing activities is an item on the cash flow statement that reports the aggregate change in a company's cash position resulting from investment gains or losses and changes resulting from amounts spent on investments in capital assets, such as plant and equipment.
An asset retirement obligation (ARO) is a liability associated with the eventual retirement of a fixed asset. The liability is commonly a legal requirement to return a site to its previous condition. A business should recognize the fair value of an ARO when it incurs the liability and if it can make a reasonable estimate of the fair value of the ARO. If a fair value is not initially obtainable, recognize the ARO at a later date, when the fair value becomes available. If a company acquires a fixed asset to which an ARO is attached, recognize a liability for the ARO as of the fixed asset acquisition date. Recognizing this liability as soon as possible gives the readers of a company's financial statements a better grasp of the true state of its obligations, especially since ARO liabilities can be quite large.
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